Important MCQ questions for Class 11 Accountancy Chapter 5-Bank Reconciliation statement
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MCQ Questions for Chapter 5-Bank Reconciliation statement class 11 Accountancy (Questions set-1)
Accounting - MCQ on Bank Reconciliation Statement
Class XI
Q.1 The statement prepared to reconcile the difference between cash book balance and pass book balance is called
a. bank statement
b. balance sheet.
c. bank reconciliation statement.
d. cash book.
Answer:
(b) Bank Reconciliation Statement
Explanation- Bank Reconciliation Statement is prepared on a particular date to reconcile the bank balance in the Cash Book with the balance as per Bank Pass Book by showing all causes of differences between the two.
Q.2 Money deposited into Bank will be recorded in-
a. bank column.
b. cash column.
c. discount column.
d. date column.
Answer:
(a) Bank Column
Explanation- Money deposited into a Bank is recorded in the Bank Column on the debit side while withdrawals are recorded on the credit side.
Q.3 A bank reconciliation is prepared so that the difference in the under mentioned balance is reconciled:
a. the difference in the balance in the bank and cash balances.
b. the difference in the Pass Book and Cash Book balances .
c. the difference in the balances in the Pass Book in the beginning and at the end.
d. the differences in the balances in the Cash Book in the beginning and at the end.
Answer:
(b) The difference in the Pass Book and Cash Book balances
Explanation- The difference in the Pass Book and Cash Book balances is shown under the Bank Reconciliation Statement.
Q.4 The Pass Book of the account-holder is a copy of
a. the bank columns in the Cash Book of the account holder.
b. the cash column in the Cash Book of a customer.
c. the cash column in the Pass Book of a customer.
d. the relevant account in the books of a bank.
Answer:
(d) The relevant account in the books of a bank
Explanation- The relevant account in the books of a bank is a part of the account-holder’s Pass Book.
Q.5 The bank statement is sent by
a. bank.
b. customer.
c. creditor.
d. debtor.
Answer:
(a) Bank
Explanation- The bank statement is sent by bank.
Q.6 The statement of assets, liabilities and capital is known as
a. journal.
b. voucher.
c. ledger.
d. balance sheet.
Answer:
(d) Balance sheet
Explanation- The balance sheet is a statement of assets, liabilities and capital.
Q.7 Ledger is also called the
a. subsidiary book.
b. principal book.
c. trial balance.
d. balance sheet.
Answer:
(b) Principal Book
Explanation- The Ledger is also called the Principal Book.
Q.8 To record receipts and payments of cash, we maintain -
a. cash book.
b. sales book.
c. purchases book.
d. journal.
Answer:
(a) Cash book
Explanation- Cash book is prepared to record receipts and payments of cash, including receipts into and payments out of the bank.
Q.9 The bank statement is sent by the bank to the
a. creditor.
b. banker.
c. customer.
d. debtor.
Answer:
(c) Banker
Explanation- The bank statement is always sent by the bank to the customer.
Q.10 A Bank Reconciliation Statement is prepared to
a. draw a cheque.
b. withdraw bank balance.
c. deposit cash.
d. reconcile bank balance.
Answer:
(d) Reconcile bank balance
Explanation- A bank reconciliation statement is prepared to the reconcile bank balance with the cash book.
Q.11 Cash book is a special
a. journal.
b. ledger.
c. trial balance.
d. balance sheet.
Answer:
(a) Journal
Explanation- Cash Book is a special Journal. This book enables us to know the balance of cash in hand or cash at bank at any point of time.
Q.12 A document which is in writing drawn upon a specified banker and payable on demand is known as
a. debit and credit notes.
b. pay-in-slip.
c. cheque.
d. invoice.
Answer:
(c) Cheque
Explanation- A cheque is a document which is in writing drawn upon a specified banker and payable on demand. The bank supplies the cheque forms.
Q.13 When bank column of a Cash Book shows a debit balance it means
a. balance lying with customer.
b. balance lying with bank.
c. balance lying idle.
d. balance lying with firm.
Answer:
(b) Balance lying with bank
Explanation- When bank column of a Cash Book shows a debit balance it means the balance is lying with bank. It shows positive balance.
Q.14 When Pass Book shows a credit balance it means
a. balance lying with bank
b. balance lying idle.
c. balance lying with customer.
d. negative balance.
Answer:
(a) Balance lying with bank
Explanation- When Pass Book shows a credit balance it means the balance is lying with bank, i.e. amount due from the bank. It shows a positive balance.
Q.15 Cash book is of
a. two types.
b. four types.
c. eight types.
d. three types.
Answer:
(d) Three types
Explanation- The main cash book may be of three types:
(1) Simple cash book
(2) Two-column cash book, and
(3) Three-column cash book
Q.16 Cash book is a part of the
a. journal.
b. ledger.
c. trial balance.
d. balance sheet.
Answer:
(b) Ledger
Explanation- Cash book is a part of the ledger also. Hence, it has also to be treated as the principal book. The cash book is, thus, both a subsidiary book and a principal book.
Q.17 When bank column of a Cash Book shows a credit balance it means
a. debit balance.
b. balance lying with customer.
c. overdraft.
d. balance lying with banker.
Answer:
(c) Overdraft
Explanation- When bank column of a Cash Book shows a credit balance it means overdraft, i.e. amount due to the bank. It is negative balance.
Q.18 When pass book shows a debit balance it means
a. overdraft as per Pass Book.
b. overdraft as per Cash Book.
c. overdraft as per Firm Book.
d. positive balance.
Answer:
(a) Overdraft as per Pass Book
Explanation- When pass book shows a debit balance it means Overdraft as per Pass Book. It is a negative balance.
Q.19 Debit Balance as per Cash Book and Credit Balance as per Pass Book means a
a. unfavourable balance.
b. debit balance.
c. favourable balance.
d. credit balance.
Answer:
(c) Favourable balance
Explanation- Debit Balance as per Cash Book and Credit Balance as per Pass Book or Bank Statement means a favourable balance. It is a positive balance.
Q.20 Credit Balance as per Cash Book and Debit Balance as per Pass Book mean
a. debit balance.
b. favourable balance.
c. credit balance.
d. unfavourable balance.
Answer:
(d) Unfavourable balance
Explanation- Credit Balance as per Cash Book and Debit Balance as per Pass Book or Bank Statement mean an unfavourable balance. It implies negative balance.
Q.21 Name the primary book of accounts in which transactions are originally recorded in a chronological order.
a. cash book.
b. journal.
c. sales book.
d. purchases book.
Answer:
(b) Journal
Explanation- Journal is that primary book of accounts in which transactions are originally recorded in a chronological (day-to-day) order. It is called the book of original entry.
Q.22 The page number in the ledger where the relevant account will be found is known as
a.L.F.
b. J.F.
c. Particulars.
d. Date.
Answer:
(a) L.F.
Explanation- L.F. - the page number in the ledger where the relevant account will be found is written.
Q.23 How many causes of difference between Pass Book and Cash Book are there?
a. two.
b. four.
c. five.
d. seven.
Answer:
(a) Two
Explanation- Causes of difference are-
1. Timing of recording the transaction
2. Error made by business or by the bank.
Q.24 Journal Entries are of
a. three types.
b. twelve types.
c. six types.
d. two types.
Answer:
(d) Two types
Explanation- Entries in the Journal may be divided into two groups:
1. Simple Entry
2. Compound Entry
Q.25 Liabilities plus Capital is equal to
a. Liabilities.
b. Drawings.
c. Assets.
d. Capital.
Answer:
(c) Assets
Explanation- The equation says that the assets of a business are always equal to the claims of owners and the outsiders.
Q.26 If the amount due from debtor is not realised, it is known as
a. bad debts.
b. debtor.
c. overdraft.
d. creditor.
Answer:
(a) Bad debts
Explanation- When a debtor becomes bankrupt, i.e. unable to pay one’s debts, the entire amount due from him is not realised. The unrealised amount is a loss to business, the same is called Bad Debts.
Q.27 Balance c/d is known as
a. balance carried down.
b. balance bring down.
c. balance carry down.
d. balance brought down.
Answer:
(a) Balance carried down
Explanation- It is normally treated as a closing entry.
Q.28 Transactions which are recorded in three-column cash book which relates to both cash and bank is to be called as
a. compound entry.
b. contra entry.
c. journal entry.
d. cash entry.
Answer:
(b) Contra entry
Explanation- Some transactions are recorded in three-column cash book which relates to both cash and bank i.e. balance of one will decrease and other will increase due to such transactions. Such transactions are entered on both the sides of cash book. Such entries are known as Contra entries.
Q.29 Against contra entries, the following letter is written
a. C.
b. D.
c. B.
d. A.
Answer:
(a) C
Explanation- Against such entries, the letter ‘‘C’’ should be written in the L.F. column to indicate that these are contra transactions. As a matter of facts, no further posting will be required for them.
Q.30 Sometime insolvent debtor whose account had been earlier written off as ‘Bad Debts’ pays some amount. This amount so received is known as
a. bad debts.
b. cash withdrawn.
c. debtors.
d. bad debts recovered.
Answer:
(d) Bad Debts recovered
Explanation- Sometime insolvent debtor whose account had been earlier written off as ‘Bad Debts’ pays some amount.The amount so received is a gain to the business and is known as Bad Debts Recovered.The entry of bad debts recovered is:
Cash/Bank A/c Dr.
To Bad Debts Recovered A/c
Q.31 Whenever the trader avails a bank service, the trader has to pay a charge for that service called
a. cash charges.
b. loan charges.
c. file charges.
d. bank charges.
Answer:
(d) Bank charges
Explanation- Whenever the trader avails a bank service, the trader has to pay a charge for that service called bank charges. It is written on the credit side of the cash book and amount is entered in the bank column.
Q.32 A reduction in amount whether to encourage more purchases or prompt payment is called
a. commission.
b. interest.
c. discount.
d. drawings.
Answer:
(c) Discount
Explanation- A reduction in amount whether to encourage more purchases or prompt payment is called discount.
Q.33 When the bank allows the firm to withdraw more than the amount deposited then it is called
a. bank charges.
b. overdraft.
c. fixed deposit .
d. demand draft.
Answer:
(b) Overdraft
Explanation- When the bank allows the firm to withdraw more than the amount deposited. This is called an overdraft. In such a case, the total of the bank column on the credit side will be bigger than the one on the debit side.
Q.34 Balance b/d is known as
a. balance carried down.
b. balance bring down.
c. balance carry down.
d. balance brought down.
Answer:
(d) Balance brought down
Explanation- Assets will show a debit balance. Such accounts will be opened and the relevant amounts written on the debit side as ‘‘To Balance brought down.’’
Q.35 The allowance made to a customer if he purchases goods above a certain quantity or an amount is known as
a. cash discount.
b. trade discount.
c. credit discount.
d. retail discount.
Answer:
(b) Trade discount
Explanation- Trade discount is an allowance made to a customer if he purchase goods above a certain quantity or an amount. The discount so allowed is reduced from the sale value and the sale or purchase is recorded in the books at the net value.
Q.36 The allowance to encourage prompt payment of amount due is known as
a. trade discount.
b. retail discount.
c. credit discount.
d. cash discount.
Answer:
(d) Cash discount
Explanation- Cash discount is an allowance to encourage prompt payment of amount due. Cash discount, received or allowed is recorded separately in the books.
Q.37 The total of both the sides of account equal and to write the difference in the side whose total is short is known as
a. totalling of accounts.
b. balancing of accounts.
c. cash accounting.
d. capital accounting.
Answer:
(b) Balancing of account
Explanation- For example, if total of credit side is more than the debit side of any account the difference of amount will be recorded as Balance c/d on debit side and vice versa on the credit side.
Q.38 When the owner withdraws any money or goods from the business for his personal use then it is known as
a. overdraft
b. prepaid expenses.
c. capital.
d. drawings.
Answer:
(d) Drawings
Explanation- Proprietor does this for his personal use.
Q.39 In order to update ledger account on accrual basis, following entries are made at the end of the accounting period.
a. adjustment entries.
b. opening entry.
c. journal entry.
d. closing entry.
Answer:
(a) Adjustment entries
Explanation- In order to update ledger account on accrual basis, adjustment entries are made at the end of the accounting period. Such as Rent outstanding, Prepaid insurance, Depreciation and Commission received in advance.
Q.40 Credit purchases or goods dealt in or of materials and stores used in the factory are recorded in a separate register called
a. sales book.
b. purchases return book.
c. purchases book.
d. sales return book.
Answer:
(c) Purchases book
Explanation- Credit purchases or goods dealt in or of materials and stores used in the factory are recorded in a separate register calledthe purchases book or the purchase journal.
MCQ Questions for Chapter 5-Bank Reconciliation statement class 11 Accountancy (Questions set-2)
Q.41 The allowance to encourage prompt payment of the amount due is known as
a. trade discount.
b. retail discount.
c. credit discount.
d. cash discount.
Answer:
(d) Cash discount
Explanation- Cash discount is an allowance to encourage prompt payment of amount due. Cash discount, received or allowed is recorded separately in the books.
Q.42 Prepaid expenses is the part of
a. Long-term liability.
b. Current assets.
c. Current Liability.
d. Fixed assets.
Answer:
(b) Current assets
Explanation- Prepaid expenses is the part of current assets which can be converted into cash within a period of one year.
Q.43 If the firm receives a number of promissory notes then such transactions are recorded in a separate book called
a. bills payable book.
b. purchases book.
c. bills receivable book.
d. sales book.
Answer:
(c) Bills receivable book
Explanation- If the firm usually receives a number of promissory notes or hundis, it would be convenient to record the transactions in a separate book called Bills Receivable Book.
Q.44 Formula for calculating liability is
a. Assets + Liabilities.
b. Assets - Liabilities.
c. Assets + Capital.
d. Assets - Capital.
Answer:
(d) Assets - Capital
Explanation- Liabilities are debts, they are amounts owed to creditors. Thus, the claims who are not owners are called ‘‘Liabilities.’’
Q.45 If the firm issues promissory notes then such transactions are recorded in a separate book called
a. bills receivable book.
b. sales book.
c. purchases book.
d. bills payable book.
Answer:
(d) Bills payable book
Explanation- If the firm issues promissory notes or hundis then a separate book called Bills Payable Book is prepared.
Q.46 Formula for calculating capital is
a. Assets + Liabilities.
b. Assets - Liabilities.
c. Assets - Capital.
d. Assets + Capital.
Answer:
(b) Assets - Liabilities
Explanation- Capital is also known as Owner’s Equity, proprietorship and net worth. Owner’s Equity means owner’s claim against the assets of the business. It will always be equal to assets less liabilities.
Q.47 Payment of insurance, rent of shop in advance is the examples of
a. outstanding expenses.
b. sundry expenses.
c. prepaid expenses.
d. postpaid expenses.
Answer:
(c) Prepaid expenses
Explanation- Normally payment of certain expenses like Insurance, Rent of Shop etc, are paid in advance. Such expenses are termed as advance or prepaid expenses.
Q.48 Fall in the value of assets is known as
a. outstanding expenses.
b. prepaid expenses.
c. sundry expenses.
d. depreciation.
Answer:
(d) Depreciation
Explanation- Due to continuous use of fixed assets, value of these assets keeps on decreasing every year. This diminition is called the depreciation.
Q.49 Examples of assets other than fixed assets are
a. machinery and plant.
b. creditors and short-term loans.
c. long term loans and public deposits.
d. stock and prepaid expenses .
Answer:
(d) Stock and prepaid expenses
Explanation- Current assets are those assets which can be converted into cash within a period of one year.
Q.50 Return of a cheque unpaid generally due to insufficient funds is
a. honour of a cheque.
b. cleared cheque.
c. account payee cheque.
d. dishonour of a cheque.
Answer:
(d) Dishonour of a cheque
Explanation- Dishonour of a cheque means return of the cheque unpaid, generally due to insufficient funds in the customer’s account with the bank.